The Supreme Court today agreed to hearArizona Free Enterprise v. Bennett (consolidated with McComish v. Bennett), a case involving Arizona's public campaign funding system. Under the system, candidates who participate in the State's public campaign finance program qualify for additional public matching funds when expenditures by and on behalf of a nonparticipating opponent exceed the participating candidate's original public grant. The system thus seeks to even up expenditures between participating candidates and nonparticipating candidates who can vastly outspend them.

The Court previously issued an order reinstating the trial court's injunction against the Arizona law and staying the Ninth Circuit's mandate overturning that injunction. The law was therefore not in effect for the recent election. We posted on the case here and here.

Arizona enacted its system in response to a rash of political scandals in the state. Under the system, participating candidates get a lump sum grant for the primary campaign. If funds spent by and on behalf of the nonparticipating opponent exceed that grant, the participating candidate receives state "matching funds" equal to the combined spending of the nonparticipating opponent, plus independent expenditures against the participating candidate, minus six percent and less the amount of early contributions raised by the nonparticipating opponent during preprimary fundraising. (Why minus six percent? Because the State determined that six percent represents fundraising costs for the nonparticipating opponent.) The system works similarly in the general election.

The District Court ruled that the system violated the First Amendment, but the Ninth Circuit reversed. The Ninth Circuit ruled that the system has a hybrid effect on both contributions and expenditures, and therefore "affects fully protected speech," but that any burden it imposes "is indirect or minimal." Op. at 9161. The court ruled that the system's restriction on speech was merely theoretical (not actual), and that the plaintiffs failed to show that it resulted in any restriction on their speech. Thus the burden on speech "is most analogous to the burden of disclosure and disclaimer requirements in Buckley and Citizens United." Op. at 9166. The court thus applied intermediate scrutiny (and not strict scrutiny).

The Ninth Circuit distinguished Davis v. FEC, the Court's OT '07 case striking down the "Millionaire's Amendment." That federal law increased the cap on contributions for U.S. House candidates who were significantly outspent by self-financed opponents. The Court held that the law substantially burdened fully protected speech and therefore applied strict scrutiny. The Ninth Circuit ruled that the Millionaire's Amendment, unlike Arizona's law, applied to privately financed candidates, and thus Davis had nothing to do with a public funding system like the one here. The Ninth Circuit also noted that the Davis Court wrote that "had the law 'simply raised the contribution limits for all candidates, Davis' argument would plainly fail.'" Op. at 9160 (quoting Davis). This is exactly what Arizona tried to do.

The Ninth Circuit ruled that the Arizona system satisfied intermediate scrutiny: there is a substantial relation between the system's matching funds provision and the sufficiently important governmental interest in preventing quid pro quo corruption and the appearance of corruption. The system also encourages candidates to use the public funding system, which further promotes these interests. Participating candidates "have both reduced opportunities and reduced incentives to trade legislative favors for financial favors." Op. at 9167-68.

The case goes to a Court that has been hostile to any effort that restricts or burdens campaign expenditures, most recently in Citizens United. The difference here is that the law seeks to level up, not level down--yielding more campaign speech, not less--and it seeks to do it through a public funding system. Moreover, the plaintiffs have not been particularly persuasive in showing that the law actually burdened their speech.

A few things to watch in the case:

The level of scrutiny that the Court applies to this hybrid law. The Ninth Circuit applied the more lenient intermediate scrutiny; the Supreme Court may apply strict scrutiny.

The fitness analysis at either level of scrutiny. The State's case for actual quid pro quo corruption is weak; its case for the appearance of corruption is stronger. Either way, the fitness between the scheme and these interests may push the bounds of even intermediate scrutiny for the Court.

The plaintiffs' burdened speech. How will the Court treat the plaintiffs' case that their speech is burdened? The Ninth Circuit rejected their "theoretical" claims. The Supreme Court may take these claims more seriously.

More generally, if the Court's recent cases stand for the principle that more speech is better, then this case could turn in part on whether the Court thinks the participant's increased speech from matching funds exceeds the nonparticipant's merely theoretical speech lost from self-imposed restrictions. If, instead, the Court's recent cases say that no burden on campaign speech can stand (even if the burden is mostly theoretical, and even if the burden is outweighed by countervailing increased speech on the other side), then the Arizona law will surely fail.